United Rentals snaps up pump provider in $780 million deal

Elizabeth Kim

Published 9:42 pm, Monday, March 10, 2014

United Rentals, the world's largest rental equipment provider headquartered in Stamford, has agreed to pay $780 million to acquire National Pump, a privately-owned business that is the second-largest specialty pump rental company in North America.

The deal, which will include cash and $15 million in restricted stock, will enable United Rentals to move into pump rentals, a high-margin business which primarily serves the oil, gas and petrochemical industries but is also used in commercial and utilities construction.

National Pump, a Beaumont, Texas-based firm consisting of four companies with about 300 employees in the U.S. and Canada, had revenue of $211 million over the last 12 months ending in February. United Rentals said the acquisition of National Pump is part of its strategy to expand its specialty businesses.

"The company has the right scale to have an impact on our business and be a platform for growth," said Michael Kneeland, president and CEO of United Rentals, during an investor conference call Monday.

Kneeland said United Rentals intends to double the size of National Pump's business in five years, with the majority of growth to come from end markets outside of the oil and gas sector. Currently, half of National Pump's revenue is generated from upstream oil and gas customers.

Founded in 1997, United Rentals rents equipment such as compressors and various types of lifts to construction and industrial companies as well as to utilities, municipalities, government agencies and independent contractors. Last year, the company had $4.96 billion in revenue and $387 million in profit.

United Rentals said it expects to finalize the acquisition in the early second quarter of 2014. The company boosted its earnings outlook, projecting 2014 revenue in the range of $5.45 billion to $5.65 billion, up from a range of $5.25 billion to $5.45 billion the company estimated in January.

In June 2013, United Rentals moved its corporate offices from Greenwich to a 47,000-square-foot space at 100 First Stamford Place, a commercial property owned by Empire State Realty Trust, formerly known as Malkin Properties.

The company's Stamford headquarters has 82 employees. In addition, the company boasts more than 830 customer service locations in the U.S. and Canada staffed by approximately 11,850 employees.

Along with the building's proximity to the train station, United Rentals official cited having a larger space-double that of its space in Greenwich-as one of the reasons for the move.

"The space allows us to grow," Fred Bratman, senior vice president, investor relations, said on Monday.

However, Bratman said the purchase of National Pump, which will still be based in Beaumont, Texas, should not impact the company's operations in Stamford.

"This is an asset we haven't really rented before," he said. "Part of our growth is to find assets that are financially attractive but also are assets that our customers need and want, and National Pump fills that need."

Shares of United Rentals, traded on the New York Stock Exchange under the symbol "URI," rose 3.8 percent to $91.82 on Monday.